Wednesday, October 21, 2009

Estributors

A few years ago, two of the major bookstore chains went into the publishing business, and began producing their own books, both classic titles and new content.

It made complete sense. Why split money with publishers when you can publish it yourself and make a larger profit?

Yet, none of them ever took the next logical steps--signing a big-name author to an exclusive publishing deal. Or reprinting backlist titles that continue to sell on the used book circuit.

Seems like a missed opportunity. But then, they're retailers first and foremost, and expanding into publishing carries a lot of costs and risks.

Now, in the days of ebooks, we have the Kindle, the Sony Reader, the iPhone, and the Barnes and Noble nook.

The savvy, ewise author knows how to get his books on these devices. Mine already are, or soon will be. Kindle in particular makes it very easy to do, and Sony is stepping up as well. I'll be on iTunes soon thanks to IndiaNIC, and B&N thanks to Smashwords.com.

But Amazon, Sony, Apple, and B&N are missing out on a way to make a lot more money.

Publishers get rich by having exclusive content. Only one publisher has Stephenie Meyer. The others do not.

And yet Amazon, Sony, Apple, and B&N all carry Stephenie Meyer on their sites, for their ereaders. They're sharing the pie.

Sharing is not the main problem. All bookstores share. But in the case of Amazon, Sony, and B&N, they LOSE money on each book sold. Print publishers, in an effort to stave off the inevitable, charge these companies several dollars more for the ebook than the companies are selling them for.

The result? Every time Twilight sells, the etailer loses money. In fact, a good portion of the ebooks sold lose money for the etailer.

If the etailors got wise, they'd try to make deals with authors directly. But they won't, or can't. Because there is a cost and risk associated with publishing ebooks, the same as there is with publishing print books.

This is a shame. I'd love to sign an exclusive ebook contract, and have the etailer promote it. Sell it at a low price, and we'd both make a nice bit of change.

Maybe this will happen in the future. In the meantime, it seems like a smart person, or company, could capitalize on the current situation.

Let's call these people estributors.

In the book world, a distributor such as Ingram, Baker & Taylor, Partners, or Anderson, is the middleman between the publisher and the retailer. They warehouse the books from the publisher, and fufill orders to the bookstores and bookselling outlets.

What the ebook world needs is a middleman who can facilitate sales between Luddite authors with backlists but no tech savvy, and etailers selling ebooks.

An estributor could contact NAME authors (not self-pubbed newbies) for shelf novels and out of print backlists, arrange for cover art, format for Sony, nook, Kindle, and iTunes, and take a small percentage, say 10%, of the profits for a set amount of time.

The etailers would be making a profit from estributors, rather than hemorrhaging money like they're doing right now. Ebook prices stay low, which the customers want. And authors can concentrate on writing rather than all the tech stuff.

There are millions of out of print books still under copyright but not under contract. Estributors could position themselves to rival the sales of large publishers, if they get in while they can.

That said, they'd still have to pay people to find, recruit, and publish the books... cover design, interior formatting, etc. All of which is a top-down business model.

The Kindle currently works as a longest tail business model, where they're making a huge chunk (65%) of literally hundreds of thousands of titles, and they don't have to do any of the stuff associated with traditional publishing.

The top-down business model is inefficient, where you're restricted by the manpower to find and publish the titles (maybe a couple thousand a year at max), compared to their current model which lets the authors do all the work.

Hey Joe; I just saw on the AP newswire that Stephen King is pricing his new ebook at $35-- I think the publisher is on CRACK. The e-book will come out 1 month after the hardcover.

I understand what they are trying to do, but Stephen King is so popular that $35 is a huge incentive for some shlub to break the spine of the hardcover and just scan in the pages using OCR software. I think bootlegs will be available in less than a month.

I don't understand your desire to sign an exclusive e-publishing deal with a major bookseller. Just one or two posts back, you were extolling the virues of having control of the publishing process through your self-published ebooks versus the ones the publishers of your bound boks put out.

It seems that the benefits of a bookseller owning exclusive publishing rights to a big-name author's work is great for the bookseller, but I see no benefit for the author.

@Stacey - Is a tech savvy guy decided to start recruiting backlist authors to upload onto various etailers, he'd be an estributor.

Backlist books are already edited. He'd have to secure cover art and upload them in various formats to Amazon, SOny, iTunes, and Smashwords. I'd pay 10% of my income to have someone do that for me so I could concentrate on the writing.

@Wayne - Thanks! But I want to be a writer, not a publisher.

@Peter - Let's say I signed an e-book deal exclusively with Amazon for three years. I'd negotiate a better royalty rate than I'm currently getting on Kindle, get an advance, plus they'd promote it through email and on their site. I'd also make sure we kept the cost low. This would fuel sales of my other books, expand branding and name recognition, and likely sell more books than I'm able to do on my own.

This could be a slight hang-up. Depending on the age of the book, there may be no final version except the printed release. Short of scanning the book page by page and trying to optically recognize and convert to text, or retyping it from the final published book, it might be hard to produced a file ready for conversion.

I've often wondered when Kindle, et. al. are going to step up to the plate and begin acting like actual publishers instead of device makers. Because that's where I see this e-books thing going -- just throwing everything they can get onto their device is only going to work until the novelty wears off. Then people will be looking for actual good reads.

I am new to your blog and wanted to say hello. I enjoy the content and I look forward reading it regularly.

I just thought I would add my two cents:

Steven King is intentionally trying to help the bookstores (i.e. B&N, Borders, etc.) by releasing his eBook later than his hardcover and at comparative pricing.

Right now, bookstores with storefronts are hurting. I am sure Mr. King has a sense of loyalty and nostalgia for the business model that made him a millionaire many times over. And since eBooks still represent a relatively small portion of the distribution chain, I doubt he's concerned about his sales slumping. Also, I don't think he's hurting the eBooks distributors - he's just not helping them at the cost of penalizing the storefront distributors, at least for his next release.

Regarding the estributors (I like the name), I think that like you, they want to be distributors and not publishers.

If distributors go into publishing, they will need editors, marketing, different types of lawyers, etc… otherwise, they are really just offering authors a website where they can self-publish, right?

What Mr. King will wind up encouraging, however, is pirating. JK Rowling had had the hell pirated out of her in ebook form, partly because she's so popular, but mostly because she refused to let her books be released as ebooks.

I have little doubt Steve is going to set pirating records with his new one. And as more people see how easy it is to pirate ebooks, the more it will harm to industry, both digital and print.

If distributors go into publishing, they will need editors, marketing, different types of lawyers, etc… otherwise, they are really just offering authors a website where they can self-publish, right?

I'd say the difference between an estributor and an epulisher is the epublisher is reading to acquire books which then require editing. An estributor is working with authors whose books have already been published, and is helping those authors release them digitally.

The used book market is a 4 billion dollar per year business. I know well over a hundred authors with out of print material--and some of it goes for big bucks on Abe.com and Alibris.com and eBay.

Dunno if you've ever scanned, OCRed and corrected a whole book, Joe? One with no digital form at all to begin with.

Quite a few hours there at 10% of say $3.99. Or you $1.99. If it is one person starting up and are good at it and can get a print book done in a rather fast 20 hours? Selling 1000 at $1.99 for the first year gets them $200? 10 bucks an hour. If there's no scanning etc. and you get it down to a few hours, looks more reasonable. Build up a list that keeps selling 1000 a year and it starts to look ok. Perhaps. To start with, they might want more than 10%, and maybe later sales the rate goes down, and more to the author?

With the expert doing this you'd probably need a liasion person to do all the contracts and dealing with the Amazons etc., as the person doing the production wouldn't have time.

Someone with connection credibility that can talk to a bunch of auctorial colleagues and find if they have any work out there - unpublished like some of yours, or out of print, or short stories, or novellas, or whatever? That could talk to the mystery writers, or SF writers, or horror writers, or thriller writers, or whoever.

Also from talking to some people, some agents/estates etc. want crazy amounts of money for stuff currently not being sold - even short stories.

Some will say no, waiting for some forlorn lightning strike hope that someone will want to put it out again and sell thousands (e.g. dream on).

However, someone that acts as a clearing house to get stuff into places - and there are some 'publishers' like that at Fictionwise - and some authors of course do it - so maybe.

If you can pick stuff that there is some electronic version of to start with. Let's say like one of Lawrence Watt-Evans serials, or Tim Pratt's Marla Mason novella online - painlessly being able to get reasonably quality stuff like that into everywhere that can sell it might be more interesting? e.g. the work is then electronic formatting, not scanning labour.

"Steven King is intentionally trying to help the bookstores (i.e. B&N, Borders, etc.) by releasing his eBook later than his hardcover and at comparative pricing."

That's assuming a hell of a lot about your readers. You know, things like someone who wants the e-book would even want a hardcover or vice versa. Or they'll now go buy the hardcover and then later, the e-book because they've had to wait. Or they'll wait and pay the sum of $35 for the ebook instead of pirating. Or your e-book readers won't get miffed for being treated as second class citizens or being charged ridiculous prices and boycott you altogether. Or, well, on and on. But then, you know what they say about assuming.

To start with, they might want more than 10%, and maybe later sales the rate goes down, and more to the author?

Think of it as a long term investment.

An estributor spends, say ten hours getting a book up on iTunes, Kindle, etc. They make 10% of the writer's cut. If the writer charges $1.99, they'll make seven cents a download. Chump change.

But let's say they have three hundred clients, who each sell 1000 books per year.

Again, not a lot of money, $21,000 per year.

But that $21k per year can go on, year after year after year. Once the time was invested, it still keeps earning. In the meantime, the estributor can keep getting more authors. After five years, they'd be eanring a six figure income, with no end in sight. And this is if ebooks sell at the rate they're currently selling. All signs point to there being over a billion ereaders in the next five years, compared to less than six million now...

Sure, I realise the passive income back end possibilities, so to speak.

Yes, modelling a demand curve for always available content with increasing markets would be entertaining.

Rather different to the constantly declining availability of paper, in most cases.

Sounds interesting, certainly.

What's the guts of the contract then? 10% of revenue as long as you get it to major sellers, author retains all rights, but if wants out of your organisation has to pay your costs/termination fee or something? Or some set time period?

At 10 hours all the stuff has to be digital originally as far as you are concerned.

Ideally you'd have an octopus group perhaps - so you could cover all markets if that doesn't converge.

e.g. your books are in my local library, no idea if we can buy those ebooks from your publisher though, that sort of thing.

If King wanted to do bookshops a favour, surely he could have come up with something more creative than an extremely long book he was well aware would be a monstrously expensive hardback at a time when sales of such had an outlook that was not so great?

I can play the "if I were rich and famous" card and say that if I wanted to do brick and mortar bookstores a favor I'd publish the book myself and release it--at an inexpensive price--exclusively through bookstores.

He could cut out non-bookstore retailers and online etailers if he wanted to, much like Alanis only released her CD through Starbucks.

Of course, if he REALLY wanted to help bookstores, he could probably afford to buy controlling stock in both of the major chains. :)

Thanks. So, Amazon could go directly to these authors for both paperback and ebooks? Nice. But I’m willing to bet that publishers are negotiating ebook distribution in their new contracts.

How about your contracts? Do they include ebook distribution or can you negotiate and sell to, say, Amazon while your publisher releases it in paperbacks? (If this is too personal, feel free to ignore.)

One more thing, if you don’t mind. What constitutes ‘out of print’? Is this when the publisher just stops printing the novel? Or is there a time period involved?

Anon 8:08,

Everything about the marketing, distribution and selling of any product involves assuming what the market will bear.

And, yes, it is very possible that SK will lose some of his overall sales because of this decision. He was an early adopter of e-books, but perhaps he'd hate to see the major bookstores go under in the current economy, before they've had time to adjust to the technology changes.

He’s just throwing them a rope. That's all. (Well, it may also be that he doesn’t want to make permanent enemies. After all, the big chains will be around for awhile longer – and who knows, they may become real contenders in ebook distribution before it's all said and done. ;))

Besides, he's wealthy enough that he can afford to take the temporary hit. Right?

Blue Tyson,

I agree about the size of SK's books - but his sales remain relatively good no matter the cost. Like the ebooks, he'll lose some sales - but what he does sale will bring in more revenue per book.

For example, I hate buying hardcover books. They hurt when they hit me in the face after I doze off. But I will buy a SK hardcover anyway, and you know that they’ve got to hurt! ;^)

When I go to buy a book these days, I go to Kindle Books, I select fiction, I select horror, I select ghosts, and then I select "by publication date," so I can see what is most recently out. Then I download a sample copy. If I like it, and want to keep reading it, I buy it.

I am a reader. That is how I buy books. The other way is I see a title on a blog or website or something like "Afraid." I'm going to click on it. I'm going to read about it on Amazon if the click takes me there, and if it's on Kindle, I may download a sample of it if it's a horror story.

That's how it works for me. I got a feeling that's how it's going to work more and more into the future.

I intend to build my writing career on that assumption, plain and simple. I mean, really, is any new author going to do the following any longer:

Write only a story that will target market trends, then try to avoid the slush pile by trying to get an agent who will try to get an advance from a publisher who may or may not edit the book, market the book, print the book, or distribute the book, and then wait two years for it to be published, and then lose all the e-book rights only to find that when it didn't sell because you didn't work hard enough to promote the book with your own advance money that you are now blacklisted as a non-selling author, and if you do sell by some whim you find that after ten novels and ten years you still can't quit your day job...

Really, who's up for that game any more? The e-publishing train has arrived, and I intend to ride it. If I make no money, win no awards, and can never quit my day job. What's the difference? At least I have complete control, I can write what I want, and I don't have to put up with degradations of the traditional industry.

Google bypassed this whole situation by sending people into the libraries to scan books, ignoring copyright. They have since agreed to pay a small (to some) amount, but have given the authors whose works they scanned a deadline to claim the money or to opt out. They have no intention of contacting the authors or their agents to arrange for purchase of e-rights, they are just taking them.

I would point out Google Books/Google Editions also. I'll bet the Google versions won't be edited by people, but rather brute force analog-to-digital machine conversions. Quality will vary greatly. But, of course, a slightly wonky ebook vs. nothing is going to move some ebooks.